Kia Says Weakening Yen Becoming ‘Weapon’ for Japanese Carmakers

Laborers unload KIA Motor Corp. vehicles at the National City Marine Terminal in National City, California. Photographer: Sam Hodgson/Bloomberg

March 28 (Bloomberg) -- The weakening yen is becoming a
“weapon” for Japanese automakers by making them more
competitive, said a senior executive at South Korea’s second-largest carmaker.

“The weakening yen reinforces the Japanese competitors,”
Kia Motors Corp. Vice President Lee Soon Nam told reporters
today at the Seoul Motor Show. “The weakening yen will become
the Japanese automaker’s weapon, they now have reinforcements.”

The Japanese currency has weakened 17 percent against the
South Korean won in the past six months, making the country’s
exports cheaper versus its Asian neighbor. The slide in the yen
has accelerated since Oct. 31, when Shinzo Abe, who became
Japan’s prime minister in December, advocated for the decline to
aid the world’s third-largest economy.

Hyundai Motor Co. Chief Financial Officer Lee Won Hee said
during a conference call on Jan. 24 that a weak yen allows
Japanese automakers to aggressively market in regions where the
Korean carmakers compete, such as Australia and Russia. If the
trend continues it will have an adverse affect on Hyundai’s
profitability, he said at the time.

Morgan Stanley has estimated the currency advantage
generates about $1,500 a car for Japan’s automakers, while their
U.S. competitors put the figure at about $5,700.

Toyota Motor Corp., the world’s largest automaker, expects
U.S. auto demand to reach 15.3 million cars and light trucks
this year, about 5.5 percent more than in 2012.

Hyundai, after boosting U.S. sales of its cars and trucks
75 percent since 2008, expects its slowest annual growth in the
market in five years as it bumps up against limits in plant
capacity, the company said earlier this month.